Midterm Election Cycle: Seasonality and Market Risk
Technical patterns that preceded these cyclical corrections
The stock market moves in distinct, repeating cycles. While some seasonal patterns are minor enough to cause “analysis paralysis” among market commentators, the U.S. presidential cycle is a statistically significant pattern. Historically, the midterm election year is a turbulent or outright bearish period for equities.
Today, we will analyze these historical midterm patterns using clean technical charts rather than relying on standard statistics tables without technical indicators that help to assess the current conditions with the ones that preceded corrections in midterm years. By looking directly at price action, we can objectively evaluate the probabilities for the current midterm year of 2026.
Following the special macro analysis, we’ll dive into the performance of the high-probability setups highlighted in this week’s Weekly Compass.
Momentum hit several major milestones, with LLY 🎯, COST 🎯, and MSFT 🎯 hitting their bullish targets, while JPM 🎯, IWM 🎯 and AVGO 🎯 completed their moves straight to their bearish objectives. META ⚠️ breached its defense floor for short term bullish considerations. 6 right setups, 1 touching the stop loss reference, always provided with the setups to protect capital.
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Below, we analyze the stock market and the setups for DIA and SPY, both neared by less than a dollar 👍.
Let’s begin,